Exam 10: Classical Business Cycle Analysis

According to the misperceptions theory,if the Fed wanted to use monetary policy to influence the real economy it would have to

In recession years,________ jobs are lost than created,and vacancies and job openings ________.

If the money supply grows 7% during the year,and people expected the money supply to grow by 5%,what happens to the short-run aggregate supply curve,according to the misperceptions theory?

Short-run aggregate supply is greater than long-run aggregate supply in the misperceptions theory if

Which of the following equations is most likely to represent short-run aggregate supply according to the misperceptions theory?

An adverse supply shock would directly ________ labor productivity by changing the amount of output that can be produced with any given amount of capital and labor.It would also indirectly ________ average labor productivity through changes in the level of employment.

You are likely to think that the relative price of your good has risen and you should increase your output if you expected

Which of the following is an example of a productivity shock?

The primary reason why the Fed cannot systematically surprise the public with its monetary policy is

Models that are similar to RBC models but allow for shocks other than productivity shocks are known as

The idea that expected future increases in output cause increases in the current money supply and that expected future decreases in output cause decreases in the current money supply,rather than the other way around,is known as

Suppose the economy is characterized by the following equations. IS curve: r = 20.20 - 0.002Y LM curve: M/P = Y - 250(r + π^e) SRAS curve: Y = + 100(P - P^e) The nominal money supply is M = 19,800,expected inflation is π^e = 0.20,and full-employment output is = 10,000. (a)If the economy begins in general equilibrium,what are the equilibrium values of the price level,output,and the real interest rate? (b)If the expected price level is the price level you found in part (a),what happens to the price level,output,and the real interest rate in the short run if there's an unanticipated decrease in the nominal money supply to 14,737.5? {Hint: guess some price levels that differ from the one you found in part (a)by increments of 0.25.} (c)If the expected price level is the price level you found in part (a),what happens to the price level,output,and the real interest rate in the short run if there's an unanticipated increase in the nominal money supply to 24,937.5?

The theory that real shocks to the economy are the primary cause of business cycles is

Real business cycle theorists think that most business cycle fluctuations are caused by shocks to

Use the classical (RBC)IS-LM-FE model to show the effects on the economy of a temporary beneficial supply shock-for example,a decrease in the price of oil.You should show the impact on the real wage,employment,output,the real interest rate,consumption,investment,and the price level.

You and a friend are arguing over the issue of the nonneutrality of money.You believe that money is not neutral,and to prove your point you would cite all of the following EXCEPT

When RBC economists compare the volatility in their models to the data,what are they looking at?

If producers have imperfect information about the general price level and sometimes misinterpret changes in the general price level as changes in relative prices,then